Economy of Russia
The Economy of Russia is today a successful model consisting on a market-oriented socialist economy where the state retains a key role in the economy but social ownership and private investment are allowed and/or encouraged in some sectors. During the first years after the collapse of USSR, the economy of Soviet Russia was based mostly on a system of state ownership of the means of production, collective farming, industrial manufacturing, centralized administrative planning, state control of investment and public ownership of industrial assets. From 1996 measures of economic liberalization were implemented in order to boost the economy and to be able to compete in the new global world scenary. To know the complex demands of the modern economy and to avoid the inflexible administration that overwhelmed and constrained traditionally planned economies, the government has developed complex systems of automation of information and decision-making. These planning methods based on real-time collection of data allows for effective networking between centers of consumption, planning and production. The development of modern computing software and algorithms operating on the communication network Comnet has allowed the Soviet Russian economy to achieve high degrees of effectiveness, productivity and quality. The largest sector of the economy is services at 59.9%, followed by manufacturing and refining at 35.4% and agriculture at 6.1%. The country has an abundance of natural resources, including timber, precious metals, and particularly fossil fuels (oil, natural gas, and coal) that can be developed without the constraint of OPEC production quotas and other rules (Soviet Russia is not an OPEC member). In recent years, Soviet Russia's oil and gas production and pipeline projects have been not only a primary source of Soviet Russia's economic growth but also a geostrategic lever in the country's relationship with Europe and Asia. With respect to foreign trade, after the oil industry the key economic sector is manufacturing. The largest industries are machinery and other engineered metal products, military industry, forest industry, chemicals and more recently electronics and software. During the period 1999-2008 the average growth of the Soviet Russian economy was 4.7%. In 2009 there was a slowdown in this trend with growth below 1% during 2009, 2010 and 2011. In 2012, growth reached 2% which was passed in 2013 with 2.7% and was maintained over 3% during 2014 and 2015. Grouth surpases 4% in 2016 and 2017 and forecasts indicate stable growth above 4% for the coming years. =History= In the last years of the Soviet Union the economic crisis had become chronic after years of failed planning. The Soviet Union planned economy was not structured to respond adequately to the demands of the complex modern economy. The massive quantities of goods produced often did not meet the needs or tastes of consumers. The volume of decisions facing planners in Moscow became overwhelming. The cumbersome procedures for bureaucratic administration foreclosed the free communication and flexible response required at the enterprise level for dealing with worker alienation, innovation, customers, and suppliers. During 1975–85, corruption and data fiddling became common practice among bureaucracy to report satisfied targets and quotas thus entrenching the crisis. At the same time, the effects of the central planning were progressively distorted due to the rapid growth of the "second economy" (black market) in the Soviet Union. The situation worsened between 1989 and 1991. While the Soviet Union collapsed, the lack of real government carried to a kind of economic anarchism worsened by the fact that most of the high level bureaucrats were seeking to strengthen its position and placed themselves in an advantageous one for what seemed would be a quick entry into savage capitalism positions. After the proclamation of independence from Soviet Russia and the coming to power of Smetkov, the implementation of strict control measures and the fight against black market managed to stabilize the situation. Economic reforms that were happening in the early years, coupled with a strong state investment in modernizing production structures and planning methods served to relaunch economic growth and prepare the national economy for the new model that would be launched in the new millennium. =Economic doctrine= Current Soviet Russia economic model is a type of economic system involving the public, cooperative and private ownership of the means of production in the framework of a market economy that is managed by a cybernetic viable system called Cyberecom and controlled by the state. The system is inspirated by the "New Theory of Optimal Planning and Economic Management". The original theory began to be developed in CEMI during the late 1960s, and during the 70s and 80s was adopting new ideas that emerged from the works of the nobel prize Kantorovich. Unfortunately, these theories never could be put into practice in the Soviet Union due to the opposition of the old bureaucracy and the poor development of computers. After 1991 this theories were rescued by the new Soviet Russian government who wanted to give a technical impulse to their political reforms. The strong reformist agenda, the development of a global computer network and the implementation of mathematical methods and models in planning, served together to give shape to the current economic system of Soviet Russia. Early reforms Since coming to power of the new Soviet Russian Government, it was clear that the development of a new economic model capable of guaranteeing a state of well-being to the population and a sustained long term growth was essential for the new Russia. To get it and to get rid of the old problems affecting the economy of the Soviet Union, the new Government launched a series of political and economic measures guided by the following axes: *Total and absolute fight against corruption *Modernization of the structures and production methods *Efficient development of information networks *Development of methods and systems of decision-making support *Flexibility of the structures of the means of production allowing private and cooperative ownership *Restructuring of key economic sectors (energy, defense, high technology, etc.) to create large industrial groups controlled by the state *Gradual privatization of non-strategic industries giving priority to the collective property of workers and the industrial project more than the economic offer. *Openness to foreign investment in non-strategic sectors, especially companies from countries with cooperation agreements. The first wave of reforms were focused on Agriculture and livestock to solve the shortage of food products that threatened the country during the last years of the Soviet union. Most of these reforms were aimed at improving productivity on farms and to provide them with the best and most modern equipments and methods. However, the new government also conducted important political reforms that directly affected ownership structures and the organization of domestic markets. Agricultural laws which were adopted during this period allowed farmers to become owners of their own farms. The property could be taking individually in small farms, or collectively through the creation of agricultural cooperatives for larger farms. The role of State-owned enterprises in agriculture was reduced significantly until only framed in large farms to obtain agricultural products for industrial use or export-focused. Local and regional governments stimulated the creation of markets where farmers and cooperatives sell their products to small private shops or supermarkets cooperatives. Authorities regulated the functioning of these markets. During this first stage also reforms were applied in the industry, most of which were aimed at the modernization of the equipment and production methods. During this period promoted the participation of workers in decision-making of industrial enterprises through the steering committees. Encourage the participation of the workers along with a system of rewards and benefits for workers linked to the improvement in the efficiency of companies, resulted in a substantial improvement in the productivity and the quality of the companies and products. To carry out this modernization effort, the Government allocated a significant part of the resources obtained by foreign sales of raw materials, especially oil and gas. To overcome the technological lag in information technologies and communication, the Government encouraged the internal developmet of such technologies while trying to get the necessary technology in foreign markets. In 1995 the Government created a secret Fund based in Switzerland with a mission to buy technology companies whose knowledge would serve to develop local technologies. In 1996, with the signing of the agreement of non-aggression with Japan and the following agreements of commercial cooperation, Russia gained access to modern and efficient production technologies. The law was changed to allow joint ventures where Japan corporations gained licences to get natural resources in echange of technological cooperation with russian ones. Similar economic agreements were achieved with France, Germany, Baltic Federation and Kalmar Union. Since the beginning of the reforms, the team of mathematicians, engineers and economists from CEMI began to work on a project of macro communications network in real time which serve to interconnect all economic centers of the country (companies, farms, markets, agencies and finally consumers) and allow the economic planning to be adapted quickly to the real needs. This whole system of communication should be directed by a complex system of computing management that help the planning committees. Inspired by the 1973 Chilean experiment called Cybersyin, CEMI began working on its own system, Cybercom, which began designing in 1993 and became operational at the end of 1997. Since then Cybercom is a living system in constant growth and adaptation. 2000-2003 reforms 2004-2007 reforms 2008-2011 refomrs =Central planning= The fact that Russia has a planned economy does not mean that a single, comprehensive plan was the basis of all economic activity. An interlocking web of plans having varying degrees of specificity, comprehensiveness, and duration are in operation at all times; any or all of these can be modified during the continuous process of performance monitoring and management made under Cybercom or as a result of new and unforeseen circumstances. The resultant system of plans is a complex process, and maintaining internal consistency between the various plans is the task of the State Planning Committee. Economic plans are not plans in the style of the Soviet Union, but rather guides on which the economy must be based to achieve certain strategic economic goals defined by the Government. State Planning Committee The State Planning Committee, commonly known as Gosplan (Russian: Госпла́н),is the agency responsible for central economic planning in Russia. Established in 1921 and remaining in existence until the dissolution of the Soviet Union in 1991, Gosplan tasks were updated and actualized to carry the central economic planning of the new Russia. The main tasks of Gosplan are the creation and administration of a series of plans governing the economy of the nation and to control, maintain and supervise Cybercom. Combining the broad goals laid out by the Council of Ministers with data supplied by lower administration and Cybercom, Gosplan works out a set of preliminary plan targets to be implemented in the "economic intelligente" sofware that runs Cybercom. Among more than twenty state committees, Gosplan head the government's planning apparatus and is by far the most important agency in the economic administration. The state planning agency is subdivided into its own industrial departments, such as coal, iron, and machine building. It also had summary departments such as finance, dealing with issues that crossed functional boundaries. Soviet Russian planning was is done on a sectoral basis rather than on a regional basis, though in some sectors like food producing there are regional considerations. Cyberecom Main article: Cybercom Cybercom was created with the aime of constructing a distributed decision support system to aid in the management of the national economy. The project consists of four modules: an economic simulator, custom software to check factory performance, an operations room, and a national network of communication where each factory, farm, mine, etc. is linked to a group of redundant mainframe computers in order to transmit and receive information. Cybercom is based on viable system model theory and a neural network approach to organizational design. Information from the field is fed into statistical modeling software that monitor production indicators in real time, and alert the workers in the first case, and in abnormal situations also the central government, if those parameters fell outside acceptable ranges. The information is also input into economic simulation software that the government uses to forecast the possible outcome of economic decisions. Finally, a sophisticated center of operations provide a space where planners can see relevant economic data, formulate responses to emergencies, and transmit advice and directives to enterprises and factories in alarm situations by using the communication network. The principal architect of the system was Anatoly Volkov, who was inspired by the mathematical theories of Leonid Kantorovich and the British operations research scientist Stafford Beer. The system embodied his notions of organisational cybernetics in industrial management and was inspired by his work on the chilean socialist system called Cybersyn. Short-term planning Operationally, short-term planning is the most important for production and resource allocation. It cover one calendar year and encompassed the entire economy. The key targets set at the central level are overall rate of growth of the economy, volume and structure of the domestic product and its uses, use of raw materials and labor and their distribution by sector and region, and volume and structure of exports and imports. The state adds assessment of the ratio of raw material use against value and quantity of output to promote more efficient use of scarce resources. Four-year plans Low-range (four-year) planning use the same indicators, although with less specificity. Although the four-year plan is duly enacted into law, it is more properly seen as a series of guidelines rather than as a set of direct orders. It is typically published at the start of the four-year period it covered, and after the first one-year plan has been enacted into law. More general than a one-year plan, the four-year plan is nevertheless specific enough to integrate the yearly plans into a longer time frame. Thus it provide continuity and direction. Long-term plans Long-term comprehensive planning provide general guidance but over a longer period, fifteen or twenty years, long enough to link the four-year plans in a coherent manner. Planning mechanisms In the first phase of planning, the centrally determined objectives are divided and assigned to appropriate subordinate units. After internal consideration and discussion has occurred at each level and suppliers and buyers have completed negotiations, the separate parts are reaggregated into draft plans. In the final stage, which follows the acceptance of the total package by the State Planning Committee and the Council of Ministers, the finished plan is redivided among the ministries, and the relevant responsibilities are distributed once more to the producing units. The production plan is supplemented by other mechanisms that control supplies and establish monetary accountability. One such mechanism is the System of Material Balances, which allocated materials, equipment, and consumer goods. It acted as a rationing system, ensuring each element of the economy access to the basic goods it needed to fulfill its obligations. This allocation of resources is monitored and adapted in "real time" through Cybercom Another control mechanism is the assignment of maximum prices for all goods and services. These prices serve as a basis for calculating expenses and receipts and enterprises uses these prices as guidelines in decision-making. People's participation takes place in part through the integrative force of the party organs whose members have leading positions in the economic structure. There are also efforts to promote a common sense of purpose through mass participation of almost all workers and farmers in organized discussion of economic planning, tasks, and performance. During preliminary discussion concerning the 2012 annual plan, employees in various enterprises and work brigades of the country at large contributed 3,735,377 suggestions and comments. Ultimate decision-making, however, come from above. =Sectors= Primary Industry Services =External trade and investments= =See also= Category:Altverse Category:Soviet Russia Category:Economy Category:Economy of Soviet Russia